Purchase Requisition vs. Purchase Order: What's the Difference?
A purchase requisition is an internal request for goods or services, while a purchase order is an official order to a supplier to provide those goods or services.
A purchase requisition is a document generated within an organization to notify the need for goods or services. It starts the purchasing process. In contrast, a purchase order is a formal and binding agreement with a supplier to purchase the specified goods or services under agreed-upon terms.
Purchase requisitions are used internally to seek authorization for a purchase. They often require managerial approval. Purchase orders, on the other hand, are external documents sent to vendors, indicating official confirmation to proceed with the order after internal approvals have been obtained.
The purpose of a purchase requisition is to request authorization and ensure budget availability. It's a control mechanism. A purchase order serves as a legal agreement with the supplier to deliver the requested items, indicating quantities, prices, and delivery terms.
In the procurement cycle, purchase requisitions come first, as they initiate the need for a purchase. Once approved, they lead to the creation of a purchase order, which is the next step in the procurement process, formalizing the purchase with the vendor.
Purchase requisitions are part of the internal record-keeping, helping in budgeting and auditing. Purchase orders, once accepted by a supplier, become a contractual obligation, and are crucial for legal, financial, and inventory records.
Request for approval
Confirmation of order
Employee or department within organization
Purchaser to the supplier/vendor
Internal need and authorization request
Official commitment to buy
Role in Procurement
Initiates purchase process
Finalizes purchase agreement
Purchase Requisition and Purchase Order Definitions
A document to validate the necessity and budget availability for a purchase.
The manager approved the purchase requisition for the marketing materials.
A binding legal document between buyer and seller.
Upon receiving the purchase order, the vendor began processing the shipment.
A precursor to a purchase order in the procurement process.
Before issuing a purchase order, the company requires a completed purchase requisition.
A formal agreement with a vendor to supply specified goods or services.
The company sent a purchase order to the supplier for new office chairs.
A formal request for goods or services within an organization.
The IT team sent a purchase requisition for software upgrades.
A document confirming the terms of the transaction.
The purchase order included delivery dates and payment terms.
A document requesting approval for a planned purchase.
The department submitted a purchase requisition for new computers.
An official confirmation of an order to a supplier.
The purchase order detailed the quantity and price of the laptops ordered.
An internal control mechanism for spending.
To control expenses, all office supplies must be ordered through a purchase requisition.
An external procurement document following internal approval.
After the budget approval, a purchase order was issued for the training services.
Who typically creates a purchase requisition?
Employees or departments within an organization needing goods or services.
Can a purchase requisition be used to order goods directly?
No, it's for internal approval and doesn't place an order with suppliers.
Is a purchase order legally binding?
Yes, it becomes a binding contract once accepted by the supplier.
Can a purchase requisition be modified after submission?
Yes, but it often requires a new approval process.
How does a purchase order differ from a purchase requisition?
A purchase order is a formal agreement with a supplier, while a requisition seeks internal approval.
What happens after a purchase requisition is approved?
It usually leads to the creation of a purchase order.
Can a purchase requisition be declined?
Yes, if it's deemed unnecessary or over budget.
What is a purchase requisition?
It's an internal document requesting authorization for a purchase.
What information is included in a purchase order?
It includes details like quantities, prices, and delivery terms.
What happens if a supplier doesn’t comply with a purchase order?
It may lead to legal disputes as it’s a binding agreement.
Does every purchase need a purchase requisition?
Policies vary by organization, but it's generally recommended for significant purchases.
Are purchase orders necessary for all businesses?
While not mandatory, they are recommended for clear, legal procurement processes.
What role does a purchase order play in inventory management?
It helps in tracking orders and managing inventory levels.
Are purchase orders public documents?
No, they are commercial documents between buyer and supplier.
Who approves a purchase requisition?
Typically, a manager or someone in a supervisory role within the organization.
Does a purchase requisition involve financial commitment?
No, it’s a request for approval, not a financial commitment.
Is a purchase order valid without a vendor’s acceptance?
No, it requires acceptance to be legally binding.
How do digital systems affect purchase requisitions and orders?
They streamline and automate the approval and ordering processes.
Can a small business operate without purchase orders?
Yes, but it increases the risk of miscommunication and disputes.
What is the importance of a purchase requisition in budgeting?
It ensures expenses are pre-approved and budgeted.
Written bySumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited bySawaira Riaz
Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.